Risk factor

The risk factor corresponds to the levels for the risk of incorrect acceptance.
By default, the table below determines your risk factor, based on your assessments of the risk of material misstatement for the audit area and assertion being tested and other substantive procedures risk. Risk factors range from 3.0 to 0.9, which is analogous to a range of 5% to 40% of the risk of incorrect acceptance.
Risk of Material Misstatement
Assessment of Other Substantive Procedures Risk
High
Moderate
Low
High
3.0
2.3
1.9
Moderate
2.3
1.6
1.2
Low
1.9
1.2
0.9
Use of the table permits you to hold audit risk to an appropriately low level while adjusting the level of the risk of incorrect acceptance in response to the other assessed levels of risk, and permits you to adjust sample size to various combinations of assessed risk levels.